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Fail Fast, Fail Cheap - Merck rewards scientists for failure

Bob Cooper, over at the Kellogg Innovation blog, draws attention to a Business Week article on Richard Clark’s efforts to turn Merck around. While the article itself is interesting, what caught my eye was the way in which he is attempting to reduce the cost of failure by having scientists stop doomed efforts earlier. Here’s the snippet I thought was interesting:

KILL FEE
Merck is rewarding scientists for failure.

One of the hardest decisions any scientist has to make is when to abandon an experimental drug that’s not working. An inability to admit failure leads to inefficiencies. A scientist may spend months and tens of thousands of dollars studying a compound, hoping for a result he or she knows likely won’t come, rather than pitching in on a project with a better chance of turning into a viable drug. So Kim is promising stock options to scientists who bail out on losing projects. It’s not the loss per se that’s being rewarded but the decision to accept failure and move on. “You can’t change the truth. You can only delay how long it takes to find it out,” Kim says. “If you’re a good scientist, you want to spend your time and the company’s money on something that’s going to lead to success.”

Management consultants say rewarding misses as well as hits is the right idea, and one that the entire industry will need to adopt. “The earlier you determine when something should be killed, the better,” says Charlie Beaver, vice-president at consultant Booz Allen Hamilton Inc. Still, he warns, changing a corporate culture from one that thrives on success to one that also accepts failure “is a very large hurdle to overcome.”

While Clark is encouraged by the results of his changes so far, he’s still haunted by the culture of complacency that left companies like his stuck in an innovation rut. “If you ever feel comfortable that your model is the right model, you end up where the industry is today,” he says. “It’s always going to be continuous improvement. We will never declare victory.”